What is a Gas Fees?
Quick Definition
Gas fees are the transaction costs paid to a blockchain network to execute transactions and run smart contracts.
Full Definition
Every action on a blockchain requires computational work to process and validate. The fees paid for this work are called gas fees (sending tokens, deploying smart contracts, interacting with DeFi protocols). They go to the validators or miners who secure the network and process transactions, creating the economic incentive that keeps the blockchain running.
Gas fees vary based on network demand, the complexity of the transaction, and the design of the specific blockchain. On Ethereum mainnet, fees can range from a few cents to tens of dollars depending on network congestion. On Layer 2 networks like Arbitrum, fees are typically a small fraction of Ethereum mainnet costs. On other networks like Solana, fees are generally very low by design.
What gas fees mean for stablecoins
For stablecoins, gas fees affect everything from how holders use the token to which protocols are practical for institutional flows. High gas fees on Ethereum mainnet make small transactions impractical, which is one of the reasons stablecoins have expanded onto Layer 2 networks and alternative Layer 1s. Lower fees enable more use cases that simply aren't viable when each transaction costs $10 or more, such as micropayments, smaller transfers, and more frequent interactions.
Gas fees and Steady
Gas fees apply to any transaction involving STDY, just like any other token on Ethereum or Arbitrum. The rebase mechanism itself doesn't require gas fees from holders, as there is no transaction involved. Only when you transfer, trade, or redeem STDY do gas fees apply. By offering STDY on both Ethereum and Arbitrum, Steady provides holders with the flexibility to choose the network that best fits their cost and operational requirements.
Related Terms
Arbitrum
ReadArbitrum is a Layer 2 blockchain network built on top of Ethereum, designed to offer faster and cheaper transactions while inheriting Ethereum's security and infrastructure.
Ethereum
ReadEthereum is the most widely used public blockchain for smart contracts, tokens, and decentralized applications.
Layer 1 / Layer 2
ReadLayer 1 refers to a base blockchain network like Ethereum or Bitcoin; Layer 2 refers to networks built on top of a Layer 1 to improve scalability, speed, and cost efficiency.
Other Glossary Items
Learn about common and essential terms related to Steady and other stablecoin protocols.
Algorithmic Stablecoin
ReadAn algorithmic stablecoin attempts to maintain its value through automated rules that adjust token supply based on market demand, rather than holding equivalent reserve assets.
AML
ReadAML (Anti-Money Laundering) refers to the laws, regulations, and procedures designed to prevent the use of financial systems for laundering the proceeds of crime.
APY
ReadAPY, or Annual Percentage Yield, is the standardized rate of return an asset generates over a year, including the effect of compounding.
Asset Backing
ReadAsset backing refers to the real-world or on-chain assets held by the issuer to support the value of every token in circulation.
Asset Locking
ReadAsset locking refers to restricting access to funds for a defined period or condition, during which they cannot be transferred or used.
Asset Segregation
ReadAsset segregation is the practice of keeping client or backing assets separate from the issuer's operational funds, protecting them from the issuer's other obligations.
Audit
ReadAn audit is an independent examination of a protocol's code, reserves, or operations by qualified third parties to verify accuracy and compliance with stated claims.
Backing
ReadBacking refers to the assets or mechanisms that support a stablecoin's value and help it maintain its intended reference value.
Blockchain Network
ReadA blockchain network is the system of connected participants and infrastructure that validates, records, and maintains data on a specific blockchain.
Blockchain
ReadA blockchain is a distributed digital ledger that records transactions across a network of computers in a secure, transparent, and tamper-resistant way.
Bridge
ReadA bridge is a mechanism that enables the transfer of assets or data between different blockchain networks.
Clarity Act
ReadThe Clarity Act is a proposed US legislative framework intended to clarify the regulatory treatment of digital assets, defining when they should be treated as securities versus commodities.
Collateralization / Over-collateralization
ReadCollateralization refers to the ratio between the value of assets held in reserve and the value of tokens issued. Over-collateralization means holding more in reserves than the value of tokens issued.
Composability
ReadComposability refers to the ability of different protocols, contracts, and tokens on a blockchain to interact and combine with each other seamlessly.
Counterparty Exposure
ReadCounterparty exposure refers to the risk that another party, such as a bank, custodian, broker, or service provider fails to fulfill its obligations, potentially affecting the assets or funds it holds.
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